Smart Moves

It’s not an easy time for homebuyers. In most neighborhoods, prices keep rising. In the near-term, mortgage rates are hardly expected to fall substantially, if at all. Meanwhile, economic uncertainty is causing many wannabe homeowners to freeze in place rather than move forward.

“Due to buyer anxiety, this year’s spring market could be quite subdued,” says Michael Crowley, a past president of the National Association of Excusive Buyers Agents (naeba.org).

But consumer advocates point to statistics that show an improving situation for buyers, at least in comparison with the pandemic period when available properties were scarce and buyers found it tough to compete in bidding wars.

“Whether now would be the right time to buy a house is a personal decision. But it’s worth noting the positives in the present situation,” Crowley says.

The positives include an expanding supply of property options. New listings aren’t flooding the market, yet for more than a year, there’s been a steadily expanding supply of options.

“Though mortgage rates remain elevated, and most mortgage holders have a rate below today’s level, many sellers can’t afford to hold off any longer as families expand, new jobs in new cities are landed and life rolls on,” says Hannah Jones, a senior economic research analyst at Realtor.com, the home listing service.

While it’s not yet a buyer’s market in many popular communities, properties are taking longer than last year to attract buyers.

“Buyers are in a better position than in previous years and can take a bit longer to decide on their home, as growing time on the market brings a bit more ease,” Jones says.

Here are a few pointers for would-be buyers:

-- Study the market in your target area.

Tom Wemett, author of “How to Make Better Homebuying Decisions,” points out that there is increasing consolidation among real estate brokerages across the country, and agents working for large firms typically favor the interests of sellers over buyers.

“You have to be your own advocate and learn as much as possible about the property and trends in your local area,” Wemett says.

Sometimes, would-be purchasers shopping in a buyers’ market feel guilty about pressing their advantages when bargaining.

But Crowley says such feelings are groundless.

“It’s realistic and fair to take full advantage of your buying power,” he says.

-- Wait patiently for price reductions among overpriced properties.

In an area where the market is shifting in favor of buyers, it sometimes takes sellers time to adapt their thinking.

“The truth is that some sellers are still adjusting to their relative decline in privilege. They’re still comparing themselves with neighbors who captured an over-market price during the pandemic. It sometimes takes a while for them to adjust to the new realities,” Crowley says.

Do you have a strong interest in one or more homes that you and your agent believe are priced well over market value? Then Crowley encourages you to wait until the sellers bring down the price on their own before you start bidding.

“As often happens, sellers demanding too much will face a reckoning. If they have to move and have no offers, they might wake up in a panic of recognition. That’s when a big price drop might occur,” he says.

The key to a wait-for-a-price-drop strategy is to keep a close eye on a home of interest so you can submit your bid at the opportune moment and not lose the property to another purchaser.

“Make doubly sure your own agent keeps current on price changes. It's also a good idea to set up an alert to notify you by text or email that a price drop is occurring," Crowley says.

-- Always take full advantage of your right to a home inspection.

In sellers’ markets of past years, would-be buyers who had to contend with rival purchasers often waived their right to a home inspection to increase their appeal to owners.

But Crowley says inspections are nearly always a vitally important idea, especially for those planning to buy a property that’s over 15 years of age, which could have serious problems.

“It’s your right to walk away if your inspector documents major problems with a property you’ve contracted to buy. You always want to protect that right,” Crowley says.

In most cases, inspectors don’t find serious shortcomings. Still, many lesser issues that are found can be used to the buyers’ advantage in gaining concessions.

Suppose, for example, that your inspector projects that the roof on the house will likely fail in a few years. With these findings, you might convince the sellers to cover the entire cost of a new roof.

-- Don’t attempt to insult your way to a good deal.

In areas where rising inventories are giving buyers more power, Crowley says some prospective buyers try to take liberties that can backfire.

One common mistake involves any statement you might make that wounds a sellers’ pride in their home. Another misstep involves making a ridiculously below-market bid which so stuns the owners that they may refuse to deal further with you.

“Bottom-feeders may enjoy making very low offers as a sort of sport. But it’s not a winning strategy for making a sound purchase,” Crowley says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Countless young American families are facing severe housing challenges. One obvious factor is affordability. Another is that many older homeowners are hanging onto property they’ve refinanced to a low-rate mortgage during the pandemic, leading to property shortages.

But despite the so-called lock-in effect, life circumstances are gradually forcing more owners to let go of their home.

“Homeowners hate to give up their 2% to 3% mortgage rate, but life happens, and people have to move,” says David Palmer, a Redfin real estate agent in Seattle. He says many people are moving because a major life event like a job change or divorce has given them no other choice.

But it’s not enough for homeowners to simply decide to sell. In most cases, they must also prepare their property for public showings. And one key barrier to that process can involve the often agonizing chore of decluttering.

Sellers who prune their accumulations fare better than those who fail to remove superfluous items prior to selling, says Vicki Norris, who heads her own professional organizing firm.

“People want to picture themselves living in your place, and they can’t do that if it’s crowded with all your stuff,” says Norris, author of “Restoring Order to Your Home.”

Would-be sellers are not only advised to streamline their possessions; they should also reduce the inflow into their homes until they receive a solid contract for sale. And that means less shopping.

Many people use shopping as a form of entertainment or as a mood lifter when they’re feeling down, says Barbara Hemphill, author of “Less Clutter More Life” and other related books.

“People often shop to ignore or cover up emotional pain, though this is only a momentary fix,” Hemphill says.

For prospective home sellers, particularly those who must liquidate for financial reasons, spending time hunting through stores for the perfect addition to an already large collection of designer shoes, for example, is self-defeating behavior.

Ironically, many people begin an anti-clutter campaign with a shopping spree involving the purchase of numerous storage containers. But all those big plastic bins prove more of a hindrance than a help, states Hemphill, who began her career in professional organizing in 1978.

“What’s inevitable is that those containers will just get in your way,” she says.

Judith Rough, an expert in helping seniors downsize, strongly recommends that sellers halt all but the most essential shopping until they’ve concluded their move.

“Before you start acquiring new items, you need to measure your new space and see what will fit,” she says.

Here are a few pointers for sellers:

-- Seek outside help for major projects.

Rough estimates that to fully declutter an average-sized house usually takes at least four weeks of concentrated effort and often outside help.

“Going through everything you’ve acquired for decades is extremely emotional -- particularly if you’ve raised your family in that house,” Rough says.

To gain forward movement, sellers often turn to relatives. But Rough says you’re better off with an objective third party -- ideally a professional organizer. One source for referrals is the real estate agent who will list your property. Another is the National Association of Productivity & Organizing Professionals (napo.net).

Regrettably, many sellers can’t afford the cost of a professional organizer for numerous hours of assistance. If this is true for you, Rough suggests you limit the organizer’s help to just a few hours of planning time. Then also pay the person for a few one-hour “check-ins” on a weekly basis, during which you’ll receive a “homework” assignment for the following week.

-- Ask loved ones what items they wish to keep.

Are you the parent of grown children? If so, Rough says you may be tempted to hang onto nostalgic possessions you believe your offspring may someday want to claim. But as Rough says, “Your kids will want far less of your stuff than you expect.” So she suggests you ask them directly what they want.

-- Take photos of items you can’t keep.

Before seeking to declutter, Hemphill often recommends that sellers take photographs of entire rooms to create compact memories of these spaces. She also advises taking pictures of valued items, such as a grand piano, that are too large to bring to the next property.

“Converting prized belongings to art is a great way to hasten the clearing process and make your house more saleable,” she says.

In addition to taking photos, Hemphill recommends you keep a small box of special items

Those who convert precious items into art or photographs often find the transition to their new environment to be emotionally easier, Hemphill says.

-- Safeguard valuable documents and keepsakes.

To safeguard such non-disposable items as passports, birth certificates and diplomas, Rough suggests you encase them in clear plastic sheet protectors and place them in a three-ring binder. Alternatively, you may wish to buy a storage item designed for vital records.

-- Locate a new home for your discards.

In sifting through your accumulations, you’re bound to find many things you no longer want.

Whenever possible, Rough encourages you to donate serviceable items to a reputable charity. Through the years, for example, she’s donated many of her own discards through church groups.

Another option is to post your giveaways through your Facebook account, which could result in finding a friend, relative or acquaintance who would appreciate receiving them.

“Maybe there’s a young family you know who could use your extra furniture because they’re setting up a new household. It’s hugely satisfying to know that things you paid good money for will find the right home,” Rough says. (To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

A young Maryland couple -- an eye doctor and her accountant husband --have been renting a bungalow near her private practice for two years. As parents of a newborn girl, they’re paying $1,900 a month for childcare, which constrains their budget for housing. Even so, they’re spending more than that on rent.

Lately the pair have determined they’d be better off as homeowners than as renters. And they see no advantage in waiting to buy.

“In the suburb where we live, prices are on an endless escalator,” the doctor says. Also, our landlord is planning to sell his property. That means, even if we stay as renters, we’ll be forced to move. So, we feel an urgent need to buy a place soon.”

Of course, there are parts of the country where home prices are now slipping somewhat, including in some formerly overheated markets in Florida and Texas. But elsewhere, prices continue to rise due to relatively limited availability and general inflation.

A report by the National Association of Realtors (nar.realtor) says that about 90% of metro-area residential properties rose in value in the fourth quarter of last year. For buyers, such price gains represent a disappointing trend. But that’s not true for owners.

“Record high home prices and the accompanying housing wealth gains are definitely good news for property owners. However, renters who are looking to transition into homeownership face significant hurdles,” says Lawrence Yun, chief economist for the National Association of Realtors.

As Yun notes, the national median single-family existing home price climbed 4.8% in the fourth quarter to $410,000. Moreover, 32 markets, including the one where the doctor lives, are recording double-digit annual price appreciation.

Although motivated to soon make a purchase, the Maryland couple is nervous that they could overpay for a property in their chosen suburb, where prices soared during the pandemic. Due to the bidding wars common in the COVID-19 period, they note that several friends and relatives overpaid at the height of the market and now have buyer’s remorse.

“Overpaying is what we dread most,” the doctor says.

Here are a few pointers for purchasers:

--Seek out the internet for guidance -- but only as a starting point.

Several websites now provide free information on property values and can prove a valuable resource. One example is Zillow, which allows you to search data at either the property or neighborhood level. Another example is Redfin.

“These websites rely on publicly available data on housing transactions that have closed. The data (is) imperfect, but they take you to the right ballpark,” says Eric Tyson, a personal finance expert and co-author of “Home Buying for Dummies.”

-- Choose an established real estate agent familiar with your area.

The classic method used by real estate professionals to reach an estimation of value for a property is known as a “Comparative Market Analysis.” This technique is grounded in data on recent sales of similar homes to the one being judged.

“For people intending to buy in an area with lots of look-alike houses, this process is pretty simple. It’s much tougher if every home there is custom-built,” says Tom Early, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

In any case, your real estate agent should find at least three transactions that are roughly comparable. Then the agent should add and subtract value based on differences – such as size, number of bathrooms, etc. -- between the home you like and the others.

-- Factor local economic trends into your analysis.

Property values are always subject to change. That’s why you need to look beyond closed deals to see where values are heading.

“It’s highly unusual for home values to rise or drop in a matter of hours or days, the way stocks can do on Wall Street. Yet over time, local economic trends can make all the difference,” Tyson says.

In a community that’s heavily reliant on just one employer, a wave of layoffs at a local company could seriously hinder values in the surrounding area. On the other hand, values might rise in an area that’s expected to benefit from a school boundary change.

“Access to a top-rated high school, like one with a strong record for admissions to prestigous colleges, is a huge asset for many homebuyers with school-age kids,” Early says.

-- Seek out seller concessions if you’re in a strong bargaining position.

Though a shortage of available homes in some popular neighborhoods is pushing up home prices, there are always exceptions to the rule. For example, a plethora of properties might be available in a community with an above-average level of new-home construction.

“Suppose you live in an area with a number of big new subdivisions. With so many new units, sellers of older homes can’t be too arrogant about their chances to grab an inflated price for an older place, especially one that has upkeep issues,” Tyson says.

Often, sellers are much more willing to yield on valuable “concessions” than give way on price. This helps protect their pride.

“The top-line price is often what’s most important to sellers rather than the few concessions they must make. That’s because their pride is at stake when neighbors inquire about how well they did on their sale,” Tyson says. (To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)